tv Squawk on the Street CNBC June 4, 2013 9:00am-12:01pm EDT
half of latinos who could vote, but currently don't. >> you're preaching to the choir there, i'll bet you you do go out and vote. >> do you have a guess about how i vote? >> i have an idea, bob. >> thank you. >> thank you, joe. >> michelle, thanks for being here. >> a pleasure. >> make sure you join us tomorrow. "squawk on the street" is next. ♪ ♪ ♪ the miami heat going for a championship repeat after beating the pacers. what a game. next up an nba final with the spurs. good morning, welcome to "squawk on the street," i'm carl quintanilla. one day after kicking off june with a 138-point rally and the futures are moderately to the down side. futures are on the rise recovering from some of yesterday's sharp losses. the dow's had four triple-digit moves in five sessions.
two up and two down. we'll talk more about where we're headed in a moment. overnight in asia, the nikkei's bouncing back after a monday sell-off and still in correction territory at 13,533. if the dow ends higher today, yes, it is 21 straight tuesdays of gains. that is the longest streak ever. >> general motors is back in the s&p 500 and the s&p 100. could this pave the way for u.s. government to exit its stake in the automaker? sales force.com makes its biggest acquisition yet. cloud marketing firm, we spoke to the ceo of exact target right here on "squawk on the street." and dollar general cutting the high end of its forecasts and the shares are falling sharply in the pre-market. >> first up, a good start to june for the bulls. the dow coming off its biggest one-day gain in a month closing higher after a volatile session, in the morning, at least, shaking off the disappointing ism and construction spending data. keep in mind the dow has fallen
in seven of the past eight junes and since 2000, jim is tied with september as the dow's first month of the year. it's treacherous. it has been in recent history. >> you're supposed to sell in may and go away and sell in june and go away. may was pretty terrific except for the last week. this is a complicated market and there was a $2 billion market on the closed program to buy. we came in on friday to sell. i don't remember these kinds of things happening that really impacted the market until many, many years ago when the market was much thinner. it does say where are the players? where are the players? did they drop back? did the high frequency guys just disappear and offer nothing at the close? because these percolations are disturbing to me because what they smack of is -- oh, well, 2 billion here and 2 billion there. you can you move this market anywhere.
>> you get this lack of volatility and they pull back and then you have a lack of volume. when was it last week, when we saw the electric power companies have no bids. >> right. >> print trades at ridiculous levels because, in part, again, i think, it's pulling back in the like and no volume. >> look, i think this is a continuing theme that we should talk more about which is that people at home have to recognize that there's large buyers come in and there's nothing. large sellers -- the seller who came in on friday, maria and bill mentioned, hey, listen, there's a sell sell program. it was as if there's no buyer in the world. yesterday we didn't find out there was a buy program until after and the market goes up and up and up, and it's the institution buying. that's not the kind of market we like. >> you take the summer off? what does a home gamer do? you have to look for situations where it's deeper.
ford and gm. when you have real good news even though the journal -- there are people who want to find good news and a negative lining, but the car sales were strong and the truck sales were strong and there's real bid for those stocks because each day the analysts come out. when i look at what happened with dollar general. no bids today. we'll talk about those today. quotes alexander cutler. the chairman as saying we are not hiring aggressively and saying this environment and this sales environment it's not the time to bring out a lot of personnel which doesn't portend great things for this coming friday. >> sandy's a remarkable executive. he's done a great job. he's now the dominant player in all things electric not just in this country, but in the world. he's got -- he's run the operation very, very lean to begin with. he's not necessarily a tale of manufacturing because his
manufacturing is doing quite well, but yeah, i mean, he recognizes that this is a not great recovery. >> of course, on friday we will get that key number, one would expect from the bls, 165,000 is where a lot of the street is. 7.5% still in the unemployment rate, but it will trigger talk of tapering if it's a lot better. >> why don't we talk about good companies and bad companies. i have to bring up tapering and i worry about that. we should go to the bronx zoo, and we should visit a few of them. >> my kids went to the natural history museum and they saw it was a frog exhibit, and have you seen what a taper looks like? i feel bad. only a mother would love a taper. >> that's a striped taper. that's a zaper. >> i'm worried about the frog, the bat, the bees all problems for the world, actually the disappearance of the frog, the
bats and the bees. >> you're still on that? >> i am still on that, i think it's a sign of armageddon. >> you're going with the armageddon theory? >> why not? >> there's nothing out of china and nothing out of europe and it's u.s. centric for a change. i like that. >> yesterday's story that the chinese were back in buying nickel and moved a lot of stocks at the end of the day. when i saw gm added the s&p. the market's thinner than we think and it does feel that a lot of people have whether they sold or not, they've gone away. >> it's a nice day today in new york city. i'm doing it all. i'm doing it all. i'm going go out and look for the bees and look -- the traffic was not bad, the subway was -- i don't know. i don't know. i choose to go under ground. it's the best way to travel in this very crowded city and it's the best way. >> i have to tell you, it's worth talking about the heat. i think they can succumb. >> to the spurs.
>> how about the differential between fouls committed by the pacers, the given seven. a lot of guys talking. >> yes. yes. >> they made it pretty convincing. they did. >> that game could go to bed early. >> i think what was the bosh eight rebounds and that was a series high and of course, the 32 points for lebron who in a game seven even though he's 2 and 2 in game seven. >> he usualliy shos up. >> i'm working on a miami versus san antonio. miami, i don't know if you guys have been there, but it is a hub of business. >> saw a great deal going on. i want to move on to general motors and the shares are rising in the pre-market and after receiving the government bailout the automaker will be added to the s&p 500 at the end of trading thursday. general will replace heinz which is being acquired by berkshire
hathaway. the brazilians will be running it. there's a bookcase on gm including lots of different things. they're refreshing as much as 70% of their product line. as a result, you will get margin improvement that is even above what analysts are looking for as you're able to raise price and not to mention the government which people estimate is around 200 million shares. we kind of do because they do put something out, and i think it's every month and they try to be 9% of the volume and they do give you updates on that position and they do backtrack to where they would be. >> can they flip on the night of inclusion. >> the plan is to keep doing the dribble out. >> what a great opportunity. there may be a secondary in there at some point, although some people don't expect them to be fully out until next year. you know they're on their way out. when gm dropped it was really rather remarkable to see the government hold back selling.
you could see that these people wanted to be out there before the election. they didn't do it. tim who is a remarkable guy, massad who was in charge of that disposal for t.a.r.p. said on air, we're not going to dump it. they didn't. the government has done a remarkable job getting out of these situations. as people reflect on the may sales it was ford that got all of the accolades and not so much gm. >> before will selling trucks and people have to understand that europe is big for ford but a truck is a pab louse safabulo. >> 10,000 and that's an incredible number. >> remember when gm was now a health care company? gm now makes cars. >> there's product innovation going to the bull thesis, at least, that will enable them to take price. >> let me give you the negative side. a lot of subprime lending. >> every single positive story has a negative story right now,
and i think that's a shame that there aren't just some plain old positives. >> but they are overcapitalized, too, you can argue, trading six times and they can buy a lot of stock quite cheaply. >> ford keeps up in the dividend. >> i remember the days when you used to buy stocks because of their dividends, and i used to sell, ford, commercial paper when i was at goldman sachs. that was the finest paper in the world. only four companies that had aaa. >> berkshire, adp. j & j. is j & j still to play? >> bueller, i don't know. >> what's the fourth? >> i don't know. i have roadside assistance. >> let's do salesforce.com. >> trust me. >> salesforce.com announcing its biggest acquisition ever agreeing to buy marketing provider exacttarget, $33.75 a share for $2.5 billion in cash
and the 53% premium. here's what exacttarget had to say about his target when he appeared on squawk on the street in november. >> it's all about mobile devices and it's created an opportunity for a brand to connect with consumers in way they haven't seen before. it's effective. the return on investment in interactive and measured marketing is very, very high. it all comes back to cloud-based solutions and big data. they're now tools available that help organizations really better understand their customers and then use those insights to send highly personalized relevant communications. it's good for the consumer and good for the digital marketer. >> jim, this ipo priced at 19. not bad. >> you know benny pretty well. he's suggesting this morning that their acquisition flow will slow now as a result of this deal. >> morgan stanley said there would be a deal soon. i've got to tell you, dorsey is
in indianapolis so it's not all negative. the pacers lose, but here's a big win for the people of indianapolis and this is an email solution and they have very big customers and that is something and the sales force has lacked. i know that sales force, the last quarter, people felt wasn't that great. we also know that there's a lot of press about whether sales force, the numbers are sht as good as they seem. the stock's down 14% in two weeks. there's a lot of debate and "barron's" highlighted it, but stock-based compensation when you include that and it is an expense paying your employees and even if you do do a lot of it in stock and the numbers reverse themselves and the company's losing money. the question is always, it's very nice going up because everyone wants a stock, but if that were to reverse, no one wants the stock and they're paying cash and it could get ugly. operating cash flow -- there was a gigantic japan piece of business and the yen is all over
the place. so it's very difficult to try. i feel they could have played up the fact that the yen did kind of make these more difficult, but at the same time everyone is beating and raising and beating and raising and they did not get the beat and raise. now the cash will be used for this deal. i do think that dorsey has a fabulous product. i've used the product. i think it is a way to get a hold of people and it gives a sales force a bigger suite, but not a great win for people who bought on the deal. >> by the way, you had benny off on "mad money." here's what he told will jim. >> we talked about us being the sales and service leader for the last decade and now we're starting to get going in marketing and what we expect that just as we did it in sales, tactics will dictate our strategy over time. >> it comes a few months after they did the convertible note offering and gave him play money here. >> i should have will nailed him right then because this is the premiere marketing company in the space and i should have put
two and two together. oh, man, because i had said earlier, this would have been a terrific acquisition, but hey, you know what? they are, by the way, it they do say sales force will reduce second quarter non-gap bps by 5 cents a share. >> this is one of the most controversial stocks out there. i have always felt that they're in a land grab. they want very much to defeat sap. sap is on a lot. bill mcdermott did a terrific job. they've been gunning against oracle and that was a close friend of mark bennett and mark said he is still a good friend of larry ellison. larry is a competitive guy, but this is a space that they are trying to win. game, set, match. in order to do that they've got to spend, they have to buy and you have to buy into the vision or else, let's just say you're not on the stock. >> when we come back this morning mark farber of the gloom and doom report. does he think the style
correction is in store for the u.s. we'll talk about dollar general and their guidance and that is a big story. a lot more "squawk on the street" after this one more look at the futures and back from post 9 in a moment. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand
it's going to be a little bit of a sting for shares of dollar general. the stock down sharply in the pre-market and it's cutting full-year earnings guidance through the first sales growth. first-quarter profits came to 75 cents a share. that was in line with wall street consensus and jim, i guess, it's the guidance. we anticipate this was not good. a continued shift to lower margin items within consumables and higher inventory shrink. i never want to see that. he basically says pilfering and people do a lot more stealing. >> shrinkage. >> 2.6% same-store sales. that's the lowest comp in five years. i know. we had a swoon last year and then the group came right back, but the swoon was about analysts saying look out. things aren't so good.
consumables. they sell tobacco. they are moving into california very big. they don't have a lot of dollar generals or dollar stores in california. that is very surprising. not that long ago i was going over their presentations this morning in order to be able to do what we're talking about. may 29th they had an annual meeting with shareholders. that was the last i looked, not that long ago and they were talking a pretty good game. same-store sales, operating profit increase of 11% and may -- may 29th. >> yeah. >> that was a way ago. >> this is a freshness-dated package, right? it's like milk. >> you talk often about execution from management when you read the paragraph about earnings release. in particular margins going down by markdowns, mix -- product mix and employees stealing and you start to wonder about execution. >> they also periodic price wars among my favorite dollar tree
with the axe mamazing candy ais that i like to tweak when i'm in. action cramer. and the one thing that has change is we had the gatsby side doing well, the barbell. i see target trading up in pre-market trading. the idea that -- people trade everything. >> o, wait, the dollar stores are not doing that well. maybe people are starting to shop again at target. >> people are trying to contrast what dollar general is telling you about one consumer and with may sales up 38% are telling you about ago consumer. i mean, your gatsby index, jim gets more relevant every day. >> they raised taxes for the rich and it didn't seem to matter. i know when you say that. cramer said why don't you write a big check to the government. you think it is so great that they raised taxes. no. so far it hasn't damped that particular part of the economy. not at all. >> you communist. you're supposed to say no.
people were hurt by this. the rich were hurt. >> the people are hurt. the rich are hurt. >> right. and the widening gap between the rich and everybody else is not a concern. >> it is incredible, this number. talk about the things that you don't necessarily need. a portion of tesla, and yet they're going like -- you have to have one. you just don't need both. >> you can't have both. a want not, need not economy. suddenly they're buying porsches. >> cramer is getting revved up for his mad dash and you'll want to hear his take for the stocks he's about to put under the microscope. one more as we kick off the 21st move to the upside. we will see. "squawk on the street" is back in a minute. i want to make things more secure.
[ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪
all right. less than six minutes before the opening bell. time for cramer's "mad dash" ahead of the market open on this tuesday and we'll see if we can keep that winning streak alive. monster. let's speak metaphorically. the high growth stockser wapner's show. monster had accelerated sales in may. what do we know about monster? i did not pick up the paper and read a negative article about monster beverage. i did at the suggestion of my
daughter's pour down the five-hour energy drinks. no more five-hour energy, david. they have less caffeine than starbucks, but this could be an important tale. as good, ulta. >> i don't think the tractor supply in ulta are the key to this market. there is seriousness to it. >> ulta has to do a little investment that could hurt some of the earnings. sales force has been a high-growth stock. >> what's going on? high-multiple stocks are being hurt, why? >> they want microsoft and the stocks that sell at 12 and 11 times earnings and they want to lock in gentlemens like selling the high multiples and it will raise and it doesn't leave a lot left to buy. >> my point is it's a narrower universe and we have tremendous breadth in the market where you could buy industrials and you can buy drugs and foods and dividends and you can buy high growth. the window seems to be narrowing
and a choice. take up to 4 advil in a day or 2 aleve for all day relief. [ male announcer ] that's handy. ♪ ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪
>> you're watching cnbc's "squawk on the street." the opening bell set to ring, ending on a session high, shaking off some of the fears of the weak ism and we still have some banks. a lot of them sort of keeping their tracking gdp for q2. a lot of them are one to two. >> autos good, housing good and oil unbelievable. >> this is shamir energy. they're building these gigantic terminals to export natural gas, hiring thousands of people to build these things. that is where the cradle of job creation is louisiana, eastern texas. that's where you want to go if you want to see boom times in this nation. >> north dakota also. >> well, whatever.
union pacific bringing the oil. the railroads are going crazy. kinder morgan building pipelines and building rails and a lot of natural gas being used in the chemical plants. >> definitely driving the economy to a large degree. there is the opening bell. s&p 500 at the big board this morning and the portuguese secretary of state of finance with the european investor conference. entegris, maker of transportation products in semiconductor manufacturing. zynga broke yesterday during the session and it will be one to watch. that's 18% of the workforce getting laid off. more than 500 people shutting offices in new york, in dallas, in los angeles. people wondering if the omg pop deal was one with of the worst in tech history. >> it does have a snapple-like feel of the old days. i think zynga is a very problematic situation. gaming, it's very incredible.
rick, i know no longer the head of electronic arts. when zynga was valued at twice this company. we're a real company and switching to digital. ea, by the way, has been on fire. if you check it it was at 22 and this was a reversion to the mean. you have a big body of growth, of titles like ea has. it turned out to be a lot worth than the narrow body of titles that zynga had. zynga got hurt when the facebook relationship with zynga was disrupted. >> exact target by far, the biggest win or the s&p and that's a 53% gain. 33.75. >> this is the cloud and this is a lot of companies trying to do social media and tlieing to figure out where it's working. every time a ceo comes on "mad money." are you using social media? they are all in love with it. they love facebook because it's
just a way to reach this demographic. >> i know periodically, even charles sandberg said twitter nipping at our heels and that killed the stock of face bobbing. to date, zuckerberg ought to come out and talk about what the clievents talk about. >> as you look at facebook. >> e.t. is up sharply. i was looking at the listing and they're talking second fiscal quarter, i think. >> e trade. >> e.t. go home. >> it does go home. you were happy if you bought on the offering itself. that is a big premium and you see that in tech deals than other sectors and you will see those very significant premiums. >> he will be on "mad money" tonight and has been a buyer of these companies before they've been able to come public. obviously, this would have been one where you really wanted to buy ahead of the listing. >> i should mention shares of
canadian pacific railway. i should mention and there was a downgrade also and hedge fund manager bill ackman who runs pershing square owns a great deal of the company's stock has said they will begin selling some of the position as they represent 26% of their assets under management which is a portfolio management standpoint, at least, very large especially when you have jc penney working against you or the herbalife short not really going your way, but this one's a winner. it's up from triple where we bought it. they did buy some that low and it's a great investment and i know that it's a triple from where they bought their position and more like a double. >> proctor's good. yesterday productor bad? today proctor good? >> yeah. >> i think that's pretty simple, yes? >> i'm not that binary. >> jim cramer on twitter. he likes this, he hates that. no. if a company disappoints i don't like it as much as if it's good.
to your point, that has been a decent and it's a large position again, as well for pershing square. >> ackman feels picked on. >> i know. it's a sensitive billionaire issue. >> he's not one to say things that are -- no. like my great-great uncle vladimir lennon. i am very conscious if the rich are unhappy it's their own darn fault. >> fedex, of course has some news. dividend retiring jets early. does merrill know that it points out business is sluggish, right? fedex doing the right thing and they'll talk about taking out costs forever. sometimes you get these stories and it's actually good. it said things are sluggish. that is completely in sync with what fedex is saying. fedex saying it's sluggish. it is going to need more
earnings and the transports, by the way, there's a survey and the airlines are making more money and this is a group i like that has recharged. that group has spent some time in the wilderness. >> the statistics yesterday from air travel, just daily air travel. 8 million people in the air every day. >> and all in my plane, wherever they go. there are always 8 million people in the plane. >> 8 million people. not a seat that's accounted for. >> when you're in first class, that's where you get the -- they give you the evian water or the fiji water as opposed to in the back where they give you dasani water. >> unless you pay for it. you have to pay for everything. >> you get half a head foen out there and you get a full headphone in the front. >> spirit air. >> sav, he has been -- i had him on air, and i said your service is rated the worst. he goes -- what a bargain! i know that that's kind of
negative to be rated the worst, isn't it? >> no. people want to get from here to there and they don't want to pay a lot. i don't know. i am a little more of a comfort creature. >> yes. yes, you are. >> a man of your age needs -- a stock you like a lot, buffalo wild wings. actually taken off the focus list at baird citing valuation. the stock has been marking time ever since the last quarter where wing prices have gone down. there's a lot of chicken stories whether it be tyson or whether it be yum. >> mcdonald's. >> mcdonald's and in china they still continue to have mesmerizingly bad situation involving their food chain. smithfield foods. what happened to that? we're still worried about that deal? >> worried? i don't know. let me look at where sfd is trading and it's still below the $34 price tag. the question there is management did a deal here where apparently there were at least other interested parties and they took
a deal that maintains their job, right? typically when you're management and you're selling the company you don't keep your job, but in this case, of course, the chinese are going to keep all of management in place. and they make a nice bit of change there over at smithfield. >> i would like to see an auction there. that would be better. the question is did they short si circuit an auction. that price is a significant price. it's not as though they took the lower deal or something like that. the question is will someone try to in over the top, is that possible given the short circuit? >> do we want the chinese telling it? >> i think the chinese are buying everything around the globe and i'm still reeling from yesterday's "new york times" story that they were the winners of the iraq war which is issingering to me. >> building 20 hotels in china this year. >> that's a lot of cranes in the air. >> they've got the cranes. we do not have cranes. i mean, it is incredible how when you look at the landscape
of new york, although, obviously, the real estate is just soaring in value because there's no place -- i'm looking at queens and i was thinking about buying a house. >> you've got to be kidding me? >> -- you want me to take you back to the old neighborhood? that will will stop you from buying anything, believe me. >> the real estate in queens -- >> queens? >> in queens, i am not kidding. i am looking in queen, for real. >> i can see flushing, amid all of the -- >> there is -- 161st street. oh, yeah. start talking to me like you really know queens. you and i will take a little tour. >> astoria. astoria's great. >> i think that real estate -- >> how about the bronx? >> i don't know the bronx well enough. >> great old art deco buildings. >> i know it like the back of my hand. queens. sheriff sales. >> someone who knows real estate
probably better than that is bob pisani is on the floor. >> proud son of a home builder from philadelphia, pennsylvania and my wife's in business, too, and my whole family is. great industry, the real estate business. >> gm added the s&p 500, and there are a lot of guys playing and it's been long talked about and long anticipated and it's good news for gm and good news overall for consumer discretionary because gm is consumer discretionary and it's replacing heinz and a consumer staple and there's been money going into the discretionary sector and there's a lot of money index to this and that's why i bring it up and not quite as much as people think. gm has a market cap of $47 billion and the government owns almost half of it and the actual float is closer to 24, 25 billion and that's about what it is for heinz. the replacement dollar for dollar is equal to what heinz had. it's not a market cap that is represented. the numbers have been great for gm up 3% on the sales yesterday.
if you see these demans for the pickup trucks. i know you guys were talking about this earlier. the overall pickup, i just checked this this morning and pickup truck sales are 14% of vehicle sales now. does that strike you as amazina, twhafs? 7%, 8% a few years ago. you know why this happens? when the construction and home building business picks up. when the oil and natural gas business picks up. as those industries have picked up, pickup truck sales have picked up along with it here. so that's the important thing here. that's moving those pickup truck sales along here. then you move on and talk about dollar general because people ask me what's going on? isn't it supported in the middle and lower end retail buyer. i think the problem here has been comp store sales. i saw 2.6% on dollar general. i saw people who had estimates of 4% and 5%. you have to come down for all of the dollar stores and some of
the inventory levels and 13% increase in inventory per square foot. you have too much inventory and you have to reduce that and you have to make all sorts of conclusions about what it means for the low end of the consumer, but the bottom line is they look bloated. meantime, we're all anticipated, more finnish and esther george, at the kansas city fed and we'll be speaking in the afternoon and we'll be hearing from richard fisher as well later tonight. we've all become fed watchers and all of us down here in the middle of the day and it moves the markets almost every single day. back to you. >> fisher speaks at 8:00 in toronto and he's been someone who has killed the stock market and every time he speaks you have to sell and same thing with placer thursday. these guys are just sell, sell, sell. whatever. let's shift to bonds in the dollar and rick santelli at the cme group in chicago. thanks, jim. interest rates are starting to become a bit proactive today. you look at the intraday chart. we're starting to move toward
the higher teens right about where the high yield closes around 216, 217 and you want to watch this and remember, it all had the beginnings and the breakout that shot through the 205 yield and we've come somewhere close around 209, 210 and that may be considered enough of the test-free technicians and the retest and we're seeing selling pressure and look at the ten-year chart of the ten-year jgb. the issue is volatility. 1% is a significant psychological threshold to be sure, but between yesterday and today, the range is ten basis points and what is close to a 90 basis-point yield on that instrument so you get what you're saying. open it up year to date and it's about volatility and if the market comes down a bit and many will start paying as much attention to this. let's look at several year to date charts and some that you don't normally look at and let's look at year to date and the mexican ten-year. we think our rates and the european rates and the british
rates have moved up. look at this emerging market. multiples of our 51 bases points on their ten-year and if you look at the dollar versus the peso, you can see how the dollar has dramatically improved at the expense of the peso and it underscores one of the big topics out there and that is emerging markets has an issue. they need to put flood walls up for the liquidity and it's very tough to deal with it. it ebbs and flows in very extreme ways and they in many ways become somewhat the collateral damage of some of these big, central bank strategies. let's go to david faber who is talking stocks. if you're talking to the boss, you better have your eye on the button, david. >> i'll tell you what, this is an interesting story that we haven't mentioned. smg, the symbol said it's unanimously reprimanded the chairman for his you'ves inappropriate language and that three independent board of directors had resigned as well following the move including
lead independent director and the director who is on the compensation and government committees and the finance committees. they say departing board members didn't disagree with the operations or policies or any of those thing, but they wanted to simply shrink the board and he said as well that is the current chairman and ceo. >> he owns a lot of stock. he has been known to use colorful language in the past. i have to tell you in my many years, i don't recall somebody being reprimanded for their use of inappropriate language during a board meeting. >> it's not too utsch in of the stock price. >> i have a sense before we find out what he said we can't say it on air. >> i think that is a fair assumption, in fact, that we could not. >> do you think if we miked up ray lewis. >> that's your point. he does own tween% of the company or the funds associated
with him, own 29%. >> and just had to mention that and did want to move on as well. three directors and only can imagine and we'll get a transfer for you at some point. >> let's take a look at shares of viacom. they do sign a large distribution agreement with amazon's prime, looking for the press release again, i just wanted to go back over it, but that was a significant deal. amaz amazon's stock price up 2% and there you can see it, 2.1% and they're talking about it being an expanded multi-year multinational licensing agreement and talking hundreds of shows, thousands of episodes from the like of bubble guppies, carl and backyardigans. >> i watch them all. >> do you? >> every weekend. you turn on the television on is the, dora was not there. >> spongebob? >> do people still watch that? >> people still watch spongebob. >> the alaskan bull worm one?
>> yes. >> how about the guy that was always picked on, kevin? >> like spongebob. i think it's a really -- >> i enjoy that show. >> i had a patrick shirt when i was younger. >> this was another example, of course of the ability for these companies to garner a great deal of value from their existing content from content that they put up on the shelf long ago and amazon's willingness to continue to try and spend money to keep up if they can with netflix which is still dominant at this point. and a look at the other side of this, the great interest in hulu, so many potential bidders of that company and that company does not have operational control and a big auction out there. they also are bidding for it on the other side. >> amazon also getting into original content producing this show with john goodman and cameos from bill murray. so if you're an actor in
hollywood, it may not be what you think of first. >> look, i think we saw that with "arrested development." episode 13, by the way, the funniest. >> did you watch them all? >> episode 13. i'm in episode 13, for heaven's sake! >> making old jokes and i'll give you used stuff. >> when we come back, will worries about fed tapering put up next year's rally for financials or should you go along for the ride? as we go to break, let's take a look at early movers. the dow up 36 on this tuesday morning. back in a minute. are you thinking of playing golf with your spouse? why not show up in style with these his and hers cnbc polo shirts signed by the entire "squawk on the street" gang. well, it can be yours if you can guess friday's non-farm jobs number. tweet your guess
to @squawkstreet and don't forget the #nailthenumber. you have to be 18 years to enter, sorry, kid. go to sots.cnbc.com. you have until 8:29 a.m. eastern friday morning. good luck. [ male announcer ] it's intuitive and customizable, just like a tablet. so easy to use, it won a best of ces award from cnet. and it comes inside this beautifully crafted carrying case. introducing the all-new 2014 chevrolet impala
with the available mylink system. ♪ [ beeps ] ingeniously connecting you to your life and the road. that's american ingenuity to find new roads. and the road. i've always had to keep my eye on her... but, i didn't always watch out for myself. with so much noise about health care... i tuned it all out. with unitedhealthcare, i get information that matters... my individual health profile. not random statistics. they even reward me for addressing my health risks. so i'm doing fine... but she's still going to give me a heart attack. we're more than 78,000 people looking out for more than 70 million americans. that's health in numbers. unitedhealthcare.
[ male announcer ] with wells fargo advisors envision planning process, it's easy to follow the progress you're making toward all your financial goals. a quick glance, and you can see if you're on track. when the conveation tus to kwing where u stand, turno us. wells fargo advisors. how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪
lulu lemon has officially brought back its black yoga pants after making the changes in the material so the pants are no longer sheer. help lulu lemon out. what's the best tag line to sell pants that were once see-through and now are not. tweet us @squawkstreet and we'll get your responses throughout the morning. >> this was a big deal a couple of months ago. >> christine day, amazing. did the recall and basically in a statement saying we will not sell inferior merchandise. she's a remarkable ceo. >> a window into the treacherous nature of retail. your inventory matters. >> when you go to lululemon, it is so good to look at. >> it is? >> you want me to go into it? >> we'll get "six in 60" after a break. oh, he's a fighter alright.
he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪ [ male announcer ] see what's happening behind the scenes at ducktherapy.com.
is a customer because they have calvin klein are doing incredibly well so i would not sell pbh. >> jp says -- biomarin on mad money last night. they have fantastic products and don't worry about this one product which looked very good. >> some myeloma data. celgene got killed yesterday. he's got great products and don't leave that stock, either. >> wells raising the target on six. six flags and cedar fair, cedar fun have been monster stocks. seaworld, not as good, i think. >> disney did to theme park ticket prices yesterday from $87 to $92. >> i've always loved the jungle cruise. >> yes. as have i. >> someone here worked in the jungle cruise. >> what's on "mad money"
tonight. >> we will talk about the exact target acquisition. >> radiant has been a hot stock and it's been a mortgage investment business and susan salka and this is a provider of temporary health care and this may be the biggest winner with obama care. >> oh, yes. we'll talk more about that today and senator baroso. >> 6 clk and 11:00 eastern time and kelly evans making her way to post 9. >> too recap this morning we've gotten weak data and weak earnings and the stocks are rallying even as we get hawkish chatter from the fed. we've got that coming up and we're looking at rabini sounding like dr. doom. is anyone fighting this market? coming up next, we will speak with gloom and doom's report marc faber to find out if he's one of them. that's all when "squawk on the street" returns.
just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before.
a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪
starts to talk about tapering. could the u.s. be the next japan and mark faber weighs in. comedian and actor steve martin adds house flipper to his list of credits. we'll explain about that. >> we are days away from a key jobs report that could trigger a change in the strategy. >> let's ask paul miller and jason goldberg at barclays. good morning, guys. >> good morning. >> good morning. >> jason, let's begin with you. there's been a lot of focus on the performance of financials and one of the strongest sectors this year. does that take into account the potential for higher rates and what happens if we don't deliver on that front? >> certainly, i think the stocks are pricing in a better economic environment. housing data approved and consumer confidence has improved and loan growth off to a slow start in the first quarter and seems to be improving in the second quarter and the group should benefit from the prospects of higher interest rates. as the economy expan, loan
growth follows and helping to get interest margins. banks have been good on expenses and credit quality is very benign and they're buying back more stock sets up a nice earnings equation. >> i wonder if we have to drill down a little bit in this. paul, you would imagine that banks that are more asset sensitive, the increase in csi loans and the ones who have the bigger securities portfolio could be more hurt by this move, couldn't they? >> they could. i think most of the good news is factored in the stocks. they have to go much higher. not 50 basis points. they have to get to 3% to 4% on the ten of this year and that will put pressure the securities books. i don't know if investors will care about the short-term on that, and they'll be more excited about the growth prospect anies that could put pressure valuations down the road. so we're concerned about what could happen for the security books and mortgage banking firm and much higher rates will take away the mortgage banking which has been a big benefit over the
last couple of years for these banks. >> we're rolling through a couple of your calls here. so who do you like based on the scenario, including some of the headwinds you just discussed. what does it look like for the bank stocks over the next three to six months. well, we here at fbr believe rates will be lower for a period of time. if we get there we'll have to change a lot of our calls. we still think the mortgage trade is still there and we still think it will last until next year. trade hasn't worked right now because right now you have the ten-year that's moved 40 basis points. if there is a good job report tomorrow, these banks are going to go up, but what worries us is they will not be able to deliver over the next couple of quarters as much as investors want to do or quickly. >> what names do you like here? >> we're partial particularly to some of the bigger bank, citigroup, j.p. morgan, against the backdrop of capital markets
environment that feels better than it certainly did over the last few years in addition to what we think we'll see a modest pickup in loan growth and a continued emphasis on expenses and benign credit quality. >> there's an issue, as well, if you go back and look at the first-quarter data and we know that bank his record earnings and what we also know is that return on earnings is not as high as what we've seen at prior profitability levels and comparing where we are now at 2006 which was the proior peak, i think we are still in single digits with regard to return on equity. so what's the prospect for that improving? are we ever going to get back to the days of double digits? what does that mean for the prospect of the continued rally in the shares that are up significantly this year. i look at some of the bigger banks and you look at q1 results, wells fargo, j.p. morgan chase and it is up 15% or higher. so certain banks already there. other names like citigroup or bank of america are making progress and still have to deal
with some of the issues of the crisis, but each quarter they get closer and closer to getting back to the double digit clip. >> hey, paul. where are we on the narrative arc of regulation and oversight? i mean, the cover of "usa today" today is all about whatever happened to dodd frank and why aren't the rules stricter than they are? aig, prudential and ge are looking at increased oversight that are being considered systemically important. are the rouls going to get tougher as they get refined or not as tough as we thought. >> it appears the rules will get tougher. there are a couple of bills that move into congress that have too big to fail rules that will make the banks hold more capital and we hope that's not the case and it sure looks like that's where the regulators will go. that's why even though they have good earnings they're holding more capital against those earnings and the roes are weaker. what's the big question is will investors give these things higher valuations because
they're safer because they do have more capital. what we are concerned about is whether the investors accept a lower growth rates in earnings and it will be very hard for the banks to grow double digit. you mentioned we had moved higher on the ten-year and it looks like the move has been extended beyond that. meanwhile, there's been a buyer's strike with regard to mbs. what impact is that on the fact that we're back above 4% on the rates and if it's not reflecting a better economic outlook and the dynamics of that market. >> i do think the mbs guys are sitting on the side line where is it going to go? is it going to go higher or lower? with traders not out there buying mbs, how is that going to impact the housing market with higher rates and that's a big driver with the feel good of this economy going on right now and that's why we're concerned about what the fed will do with higher rates. the housing market runs into hiccup, people are not going to fell so good anymore.
jason, quick, last word. >> you mentioned roes are not as high as they were although the banks are still 50% off their highs and we still think there's more room to go higher. >> jason, paul, thank you both. >> bank of america rushes to court today in a case involving countrywide mortgage securities and at issue is a proposed settlement that went bad during the crisis. our kayla tausche is in new york with the latest on that. good morning, kayla. >> good morning, carl. opening statements are in the supreme court over a pact that they struck with a group of investors years ago. under the deal b of a would pay $8.5 billion. as soon as it was struck investors came out of the woodwork demanding more. lawyers representing bank of new york mellon said yesterday in court the deal was struck, quote in good faith. the bny mellon is asking the
judge to approve the settle want once and for all and making binding for all investors. in remarks this morning, they're set to justify the 8.5 billion figure with roughly a third of the $32 billion pool of defective loans. the stakes are high for bank of america, it has only reserved $8.5 billion for damages and any increase to that would come from the bank's bottom line yet again. so far, 65 investors have imposed the settlement and many affiliates of aig and all, but two pursuing their own litigation spritly. the wall street journal reporting as much as $10.5 billion more and that will news that sent b of a, and they try to clean up these various cases stacked against it after the crisis. a huge settlement over similar mortgage claims and in may, settling a longstanding suit with bond insurer bia. you can see investors want to
get this stuff out of the way and the ruling on this month's hearing is not expected for several months, at least. carl? >> yeah. i think benmosche will be on our air later on today talking about how much more they want in addition to the settlement. as you mentioned the $10 billion addition -- >> it's a big figure and it's certainly bigger than the existing settlement that's out there alone. >> kale a thank you very much. our kayla tausche. >> it's amazing how much b of a had to put up and it's an issue that investors still continue to look through. >> coming up, the man known as dr. doom will share his investment perspective on everything from the volatility in the u.s. marks to the nikkei's dissension interest negative territory. >> will you subscribe? we'll e plain coming up next on "squawk on the street." [ male announcer ] it's intuitive and customizable,
just like a tablet. so easy to use, it won a best of ces award from cnet. and it comes inside this beautifully crafted carrying case. introducing the all-new 2014 chevrolet impala with the available mylink system. ♪ [ beeps ] ingeniously connecting you to your life and the road. that's american ingenuity to find new roads.
now for some news. for all those parents who were frantically searching netflix for dora a few weeks ago. dora has a new home and julia boorstin has more on that. >> reporter: good morning, carl. for parents, amazon prime has become more appealing getting a new advantage over netflix as kids programming becomes a new battleground for the future of television. amazon has announced multi-year
agreement. giving sub describers instant screening access to nickelodeon's kids' shows and it will be exclusive streaming for many of them including hit programs like "dora the explorer," where some of them are available for the kindle kids service. >> downtown abby and skrbs movies and television show, this is its highest profile deal yet, indicating amazon's willingness to vest, to take on netflix. this comes just a few weeks after netflix announced it wasn't renewing its contract with viacom as it added more disney shows. so last week i asked netflix ceo reid hastings if failing to secure viacom content would be a problem. >> we have them that come out on network and come out on netflix. if you're a parent coming out with "blue's clues" that is a problem. we have a ton of great shows from disney and cartoon network
and there will be other shows that are on netflix today and are great for kids. >> netflix said it just wasn't worth the cost viacom wanted to charge and now we'll have to see how much they invest to create original kids' programming. david, over to you. >> julia, i always try to find out what the deals are actually worth. there is a dollar amount out there, and i'm want able to get it, i don't know if you are able as well. we are still able to put up double-digit increases in our affiliate-distribution revenues and they're framing it as a pretty positive deal for them in terms of what it means economically. >> i don't have the dollar number yet, but i am hearing that this is perhaps the biggest output of cash that amazon has done today. so amazon's biggest content deal so far and it's hard to put a number on these things and there could be certain minh muches and it does seem like amazon is willing to invest and it's a great thing for amazon to have
multiple buyers out there and we can't be sure that having multiple buyers puts the price up higher than if it was just one option than if it was netflix or amazon. >> having been on yo gappa gappa, that it will be provided by amazon prime. >> they did not consult me. so i can't guarantee that i will be on it ever again. >> i will now be searching for you and be backlogged on amazon prime. >> you do jeopardy and i do prime. >> i can't believe i missed this. i'll have to search it. >> we have it in the archives. >> interesting to see netflix shares are up 1.5% today. anyway, forget frequent flier miles. united airlines are offering a year's subscription for a are airline fees. it starts at $349 for checked baggage. it works out to checking six and a half round-trip flights in the
continental u.s. economy plus seating will be free for elite numbers of its frequent flier program. so an interesting move here because what they're trying to do is combine all of this and i wonder if it's on a move toward stickiness and obviously a play for margins, as well, but also for loyalty. >> if you've committed it for the works, look what amazon prime did when they started offering shipping deals then i might as well ord are the marginal comment from amazon. this is a way to create another revenue stream and it has been their ability not to add capacity and that's been a key differentiation between the airline industry now and perhaps, and it appears they're finally earning the cost of capital and we have the return of capital in the form of delta which was a very important milestone and the sector is more of an investable sector as opposed one that is traded. >> now that we've seen the
capacity reductions and we've seen the consolidation which has taken years, fees are going up. we are seeing the introduction of a lot of these services and look at spirit airlines, and have we gotten to that tipping point. >> they stripped out so much capacity and if you take out another row of seats, that's six chairs more that you cannot fly in the air. >> right. right. which means it will be that much tougher to get a flight. >> and to fit into some of those chairs. we have new territory here. >> would you sign up for it, by the way? >> i'm more of a delta guy. i don't know why that is. >> what if delta had it? >> i don't know. guys like us who travel often on the spur of the moment might want the flight stability of being able to pick a carrier that you didn't already commit money to. >> i think that's fair. >> in traveling with the kids, all i have to have is the tv and that's the key. they can't even tell you often times and then you have to lug around the ipads and everything else. >> the suckers are heavy, too.
you put two of those on the bag. >> it starts to add up. >> treasury secretary jack lew will be the speaker at the alpha conference. it takes place july 17th at new york's pierre hotel and for more details on the event including how to get tickets logon to deliveringalpha.com. that's a good gift. >> it's a birthday present. it happens to be my birthday, as well. what with elon musk tells shareholders today at the electric carmaker's annual meeting. we'll have a preview of that. what do tiger woods and lindsay lohan have in non? they've both been booted from a social media website. "squawk on the street" will be right back. [ female announcer ] there's one thing
dave's always wanted to do when he retires -- keep working, but for himself. so as his financial advisor, i took a look at everything he has. the 401(k). insurance policies. even money he's invested elsewhere. we're building a retirement plan to help him launch a second career. dave's flight school. go dave. when people talk, great things can happen. so start a conversation with an advisor who's fully invested in you. wells fargo advisors. together we'll go far.
the dow up 19 points as we try to shoot for our 24th tuesday up in a row. a lot of it depends on that man right there. josh lipton with the market splash. >> it is e cigarette month in u.s. tobacco that according to analysts at citi. they'll be hosting meetings with analysts, investors and this market is going to be a hot topic and the analysts themselves are saying she switched to e-cigs and retention is low here and she wonders if there's a group of outliars and we'll find out more at these analyst meetings. >> thanks very much. josh lipton. >> the quarterly deadline for investors to ask for their money back from sec capital has been
going on. >> kate kelly joins us. >> sac officials work withed last night tallying the second-quarter redemptions. that word referses to the outside investors were pulling out of the hedge fund this garter and the amount that turned into something of a referendum in the public perception of the firm which was fighting battles on multiple fronts and last quarter, and steve cohen had been implicated and a criminal insider trading case. outside investors who started the year with $6 billion in sac pulled 1.6 million. this quarter with fears rising about a potential cohen indictment amid the arrest of another sac trader and a rash of grand jury subpoenas. outside investors were expected to pull a substantial amount and outside assets that remained. of course, that still leaves cohen's 9 billion or so in internal money which still could provide the basis of a balanced hedge fund or sac office and that possibility can certainly
exist. key sac clients whose moves we are watching today include morgan stanley, hsbc and blackstone group and all of whom stayed after the tumultuous first quarter. those companies were widely expected to pull some, i'll be back to you guys as soon as we have more on the numbers which will be forthcoming in the next few hours. >> in terms of the timeline for the potential charges being brought, and that is ticking down as well, isn't it? >> it is, david. there are two sets of deadlines that our viewers may want to keep in mind. one is late july, that's essentially the statute of limitations which is the five-year deadline for prosecutors to bring additional charges associated with matthew martoma. the trader who sold positions in two pharmaceutical stocks in 2009 based on inside information and theria a second deadline of late august. trades on dell and nvidia that have snared a network of current and former sac employees
including most recently resulting in charges against longtime trader michael steinberg. that's a case that could potentially ensnare cohen as well. what's missing there and the reason people are focused on martoma. you don't see them mentioned in those details and he did do dell trading. >> different than that 20-minute conversation. >> that key 20-minute conversation between he and m martomi. it doesn't mean it wasn't necessarily incorrect and that they won't get steinberg, but it was a very small number. >> the ill-gotten gains in that were alleged to be 25 million in the tens of millions as opposed to a quarter billion which made martoma ill gotten gains in the history of insider trading cases. >> kate, thank you. >> thank you. >> when we come back, or by the way, lululemon has officially brought back its black yoga pants after making changes in the material, so the banks are no longer sheer.
you'll remember this was a big problem and it does bring us to this morning's squawk on the tweet. help lulu out. what was the tag line for the pants that were once see-through and now they're not. tweet us and we'll get your responsees. >> i would like to see jane give it a try and see how transparent they are. >> we've gotten a few winners. >> keep them coming and even some of the most bearish people on the street are turning bullish. >> take a listen to what mariel ribini toldous closing bell. >> between economic activity and the emerging market being weak, but it's a lot of liquid with qes in europe and japan. >> find out if the publisher of the gloom and doom report, mark faber is following suit. he'll join us live next if on "squawk on the street." [ lorenzo ] i'm lorenzo.
i work for 47 different companies. well, technically i work for one. that company, the united states postal service® works for thousands of home businesses. because at usps.com® you can pay, print and have your packages picked up for free. i can even drop off free boxes. i wear a lot of hats. well, technically i wear one. the u.s. postal service®, no business too small. some brokerage firms are. but way too many aren't. why? because selling their funds makes them more money. which makes you wonder -- isn't that a conflict? search "proprietary mutual funds." yikes! then go to e-trade. we've got over 8,000 mutual funds, and not one of them has our name on it. we're in the business of finding the right investments for you. e-trade. less for us. more for you.
fleet modernization. ibm buying cloud computing infrastructure company softlayer technologies. the terms of the deal haven't been disclosed yet. it maintains its position in the cloud computing market. dollar general, one of today's big losers and a game to watch. the discount retailer does match its first-quarter profit and does cut the forecast and spurs a little bit of concern about the u.s. consumer. >> the market's off to a pretty good start for the month of june and major indices up 15% so far this year. >> our next guest is known as dr. doom, but is he still bearish? >> we want to bring in marc faber from the report. >> a piece in "barron's" a few days ago in which you said you've heeded the like of ray dalio trying to keep your assets in equities and you say i shouldn't shorted anything yet although i have attempted to short the s&p and the russell 2000.
so how tempted are you today? >> well, basically, we had since may 22nd, quite the sharp drop in markets around the world as in turkey we are down 15% from the high. japan also dropped from the recent high by 15%. in the u.s. many stocks have given up gains and they are no higher than in february. i think the market is rolling over. now very near-term we are a bit oversold and we may rally back to around 1660 on the s&p and 1670 and even on the back of the strength of intel, microsoft and ibm we could make a new high, but the new high would not be confirmed by the majority of shares so the market could be quite vulnerable. >> what leads us to the new high from some of the large cap tech names that you mentioned?
>> well, i think, a lot of large-cap stocks like mcdonald's and coca-cola, walmart, and procter & gamble, they've most likely peaked out, but as i said there are still stocks that show strength, that could continue to appreciate because all of the money flows into fewer and fewer stoc stocks, the momentum shares and that could bring a new high, possibly around 1700 on the s&p. i wouldn't bet on it. as i said before, if someone put a gun on my head and said you have to be long or short, i would take the short side. >> mark, still this follows a day where we heard muriel rabini talk about the stocks to watch for a couple of more years supported by fed approximately see. do you disagree with that view? >> look. i knowure in el very well.
he's an outstanding economist. i would aren't use them now for giving me advice when to buy and when to sell shares nor when to buy gold or when to sell gold. >> i guess my point being if you agree with the fundamentals behind that argument. granted, as you say, he's talking about the macro stuff here, but we've heard this argument from quite a few people. a lot say, look, you can't fight the fed here. i wonder what is your case? is it about starting to fight the fed? about believing they can't continue to keep a bid in the market here? >> i know people like nuriel who in 2009 the s&p was at 666 said that the s&p would drop to 400, they were fighting at that time the fed. since then the market has been up 140%. you didn't have to fight the fed until now, but in my view the
global economy isn't growing much as is evident from the sales report of mcdonald's, caterpillar, tractor and on. so the market is a discounting mechanism and it has discounted quantitative easing unlimited as i said three years ago. it's never going to end, they will continue and continue and continue, but the impact of continuous monetary easing is diminishing. >> mark, when we talk about global growth, we also tend to think about china. you've spent most of your life living in hong kong and certainly a lot of time. give me your insights in terms of what your expectations are from the new leadership in china and for what it means for the ability of that enormous country to continue to grow anywhere near the rates it has in the last few years. >> i think this is a very interesting question, and i'm just celebrating next month's 40
years of asia -- i came to asia in 1973, and what i think is happening in china is there's no question about the fact that in the last 20 years china has made huge progress, huge economic development, but i equally feel that post-crisis in 2008 there was massive fiscal and monetary stimulus that has led to huge credit bubble. and i think that credit bubble is rather dangerous, and i do not believe that the chinese economies at the present time drawing by 7.8%, but rather like 4% or even less. i think the credit bubble will come undo sooner or later, but having said that, when your viewers consider china. they have to see china is a
country twice the size of europe and the u.s. combined in terms of population. so you can have some sectors and some regions like the u.s. has california. occasionally california as a recession, but new england is booming. the same can happen in china. some sectors are contracting. some provinces can still grow. >> your critics unsay they call you a fearmonger and they say you cost people a lot of money as the market has rebounded. the notion that you've been in stocks even as you've warned people about potential downturns or recessions strike some as disingenuous. how do you respond to that? >> i respond to this that i have my asset allocation, but i turned in 2009 about equities, that i've been positive about gold since 1999, and i think if you look at the tables of stock
recommendations that are publicly available, i've done very well. so my asset allocation that is 25% in stocks and 25% in corporate bonds, mostly in emerging markets, i've done well, but i'm very concerned about the future from here. a, the corporate bond market in emerging markets is fully priced and as you know, the high-yield bond market in the last two weeks has gone down by something like 6%, 7% already. and the equity markets, and indones indonesia, thailand and they are in the sky. they are already expensive. good companies. they set at 20 to 25 times earnings. i don't think there's great value there. >> so that 25%, to what level do you see that number going for your account?
>> well, i think it will not go higher. i rather think that i will reduce the equity exposure in some countries, but i am buying vietnamese shares, and i'm thinking i haven't done it yet to buy at some point some chinese shares. but the good companies in china are also expensive, they're not cheap and the last four, last november i said buy japan since then. japan was up more than 70% and in dollar terms, 35%. i want to buy more japan on a setback. >> mark, very quick. we're at a point when the fed policy is losing its impact and it's the exact same argument that we've heard bill gross say as well. >> if we get a jobs report that comes in weak, if there are more signs that the u.s. economy is rolling over. is the fed out of ammo here? >> they will continue to print, in my opinion, and i don't think
they will have an exit strategy ev ever. there is no exit, there is so deep into essentially monetizing, the u.s. treasury and the u.s. fed is one in the same. the u.s. fed buys essentially what the treasury is issuing in terms of treasurys and so this game will continue for a long time, but the impact on the asset markets, that is the question. >> mark, it's always good to have you. i love that tie. please come back very soon. >> thank you very much. bye-bye. thank you. >> marc faber joining us today from boston. >> still ahead on the show. find out which celebrity can make a multimillion dollar profit when he sells his caribbean villa. "squawk on the street" will be right back. are you thinking of playing golf with your spouse?
why not show up in style with these his and hers cnbc polo shirts signed by the entire "squawk on the street" gang. well, it can be yours. if you can guess friday's non-farm jobs number. tweet your guess to @squawkstreet. you have to be 18 years of age to enter. sorry, kid. for all of your official rules and details go to sots.cnbc.com and you have until 8:29 eastern friday morning. good luck. you can't say 'one size fits all'. it doesn't. that's crazy. we're all totally different. ishares core. etf building blocks for your personalized portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.
we know some people are never happy with the way things are. at honda, and are always dreaming of how they could be. smarter, simpler, how-on-earth-does-it-do-that... er. and they make it that way. because things can always be better. we like those people. they think like us. introducing the best civic sedan yet. made possible by honda.
[ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] [ telephone ringing ] (announcer) at scottrade, ourom clto make their money do more.re (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies."
welcome back to "squawk on the street." i'm josh lipton. here is a rocket. g3 apparel. the retailer sells under andrew mark and mark new york, reporting an eps of a nickel. net sales jumped 19% to some $272 million the company also raising its 2014 outlook to 1.57 billion of sales in a range of 320 to 330.
analysts at telsey group says it is off to a strong start. the surprise was a sizeable expansion in gross margin fueled by inventory, and they raised their price target from 46 to 40. kelly, back to you. >> thanks very much for that. >> we are also watching shares of tesla today. the automaker has lost its battle with texas to sell its cars directly to consumers. >> it's a big win for the association. the automaker says it's not commenting on the story right now. it has been fighting this battle in multiple states. its dealership license was rejected in virginia and it's won court decisions in massachusetts and new york and it's fighting legislation in north carolina. we'll have more on that from phil lebeau coming up, but guy, it was interesting. a 3% move to the upside for the shares, but they'll have to pursue a federal approach. >> we talked to the north
carolina dealer rep along with a tesla rep. they were on together and that was one of the big questions whether states would like to copy this model. if you want to sell these cars tlie the states you have to go through a dealer model. should tesla not be able to sell their cars directly to consumers given what they call the apple model? >> you would think you would want as free market as possible. >> you know what one of the problems is as well is that the dealer business model is built on people coming in to service these cars. >> yes. and that's a big stream of profits for them, something that tesla can undercut. they argue there are safety issues controlling the inventory. whether you believe it or not is another story. >> you actually drove it, right? >> that's right. >> no, i left, so i missed the test drive. >> what did you think? >> it handles really well. the experience driving it throws you off a little bit. i'm used to driving a lot of clunkers so it takes a bit of getting used to.
>> the pickup is immediate. >> you step on the gas and you move. >> absolutely. it handles well, brakes well. >> there's no sound. >> it's kind of creepy in that business is. he's used to a stick shift and says he's used to listening to the engine and you just don't hear anything. >> they don't sell that many in the grand scheme of thing, but they're selling more than they used to. that's for sure. >> right. >> when we come back, a club so exclusive that even tiger woods and lindsay lohan have been kicked out. we'll introduce you to the ceo. coming up, new data reveals that two-thirds of americans aren't sure they'll buy health insurance under the affordable care act and john barrasso will weigh in on that when we return in a few minutes. you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age.
♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ ♪ je t'adore ♪ c'est aujourd'hui ♪ ♪ et toujours ♪ me amour ♪ how about me? [ male announcer ] here's to a life less routine. ♪ and it's un, deux, trois, quatre ♪ ♪ give me some more of that [ male announcer ] the more connected, athletic, seductive lexus rx. ♪ je t'adore, je t'adore, je t'adore ♪ ♪ ♪ s'il vous plait [ male announcer ] this is the pursuit of perfection. since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes!
aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪ [ male announcer ] see what's happening behind the scenes at ducktherapy.com. [ male announcer ] see what's happening behind the scenes it was very painful situation. the rash was on my right hip, going all the way down my leg. i'm very athletic and i swim in the ocean. shingles forced me out of the water. the doctor asked me "did you have chickenpox when you were a child?" the pain level was so high, it became unbearable.
let's get to chicago and the cme and check in with rick santelli. hi, rick. >> hi, carl. everybody, of course, everywhere especially on this trading floor. there's only one big topic these days and it's interest rates, but it's wrapped in the federal reserve, and that's wrapped in the bank of japan and that's wrapped in all central banks and their entirety, trying to handicap when it's going to
alter, change, taper, when interest rates and when the economics and when employment and all of these variables are important, but it really has changed some of the discussions. you know, my train ride home yesterday i bumped into a person from california, and i actually interrupted the group because they were talking about the windfall california has and how governor brown is going to have a heck of a time trying to, you know, keep some of that surplus under wraps because in many ways it was a one-time tax benefit due to all of the issues at the end of 2012, but it brings a bigger issue. just taxes period. we don't cover every minor issue with taxes because you're not going get that fast-money trade and you're not going to change your strategy day to day, but david stockman said something that still surprised me. he thought, as a conservative, as maybe a libertarian that we ought to raise taxes and i was a bit shocked, but his answer was pretty intelligent. he thinks that the average person partakes in the meal and ought to get a meal at the time
that they take, but if we shield some of the economy from actually a tight association between what things cost and how much they will have to pay eventually because pay eventualy because taxing the rich only takes you so far, we are just prolonging and making the ultimate decisions tougher. yesterday i had republican whip kevin mccarthy on. i like that he's tight with the house ways and means committee, whose chairman is mr. camp, who happens to be running the irs scandal. the house, ways and means committee has been working on a blank sheet of paper, start from strash. not reform. which is okay, who do we give benefits that we like? in the end whose tax policy has a huge impact on capital and
capital makes the markets go round. i happen to pull a little bit of that hearing today. and once again people, i don't know that anything could be more important to the markets. not today, not tomorrow, but in general, than what these hearings will show. believe me, an irs that has -- let's consider this. when did this begin? february or march of 2009? according to politico, when did the irs start targeting these groups? november of 2010. they were historic midterms and much of this activity comes on today. i like free markets for free men and i think nothing is more in making the goals real than making sure we don't have a mccarthy style irs to stifle conservative or anybody's values because if country is going to remain vibrant we certainly
can't throw the institutions, liberties and freedoms out the windows. eventually the markets will be controlled along with every one of you watching and listening to what i'm saying. >> rick santelli, we'll continue to the discussion with the senator on the program. also, find out who bought this st. barth's villa. we'll surprise you and read answers to your twitter questions. lulu lemon bringing back the yoga pants of making sure the new abouts are no longer see-through. [ male announcer ] with free package pickup from the united states postal service a small design firm can ship like a big business. just go online to pay, print and have your packages picked up for free. we'll do the rest. ♪
see, i knew testosterone could affect sex drive, but not energy or even my mood. that's when i talked with my doctor. he gave me some blood tests... showed it was low t. that's it. it was a number. [ male announcer ] today, men with low t have androgel 1.62% testosterone gel. the #1 prescribed topical testosterone replacement therapy increases testosterone when used daily. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. men with breast cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breast-feeding, should not use androgel. serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting.
in a clinical study, over 80% of treated men had their t levels restored to normal. talk to your doctor about all your symptoms. get the blood tests. change your number. turn it up. androgel 1.62%. actor and comedian steve martin listing his villa in st. barth's for $11 million. the interesting thing is it's a flip. >> good morning, carl. well, this is a wild and crazy transaction. he bought this for under $9 million. now he's listing it for $11.4 million, which means if he gets the asking price, he'll make a
$2.4 million profit. plus, he's been renting it out other the years for between $16,000 and $38,000 a week. the property is called villa villa o'soeleil. the big draw is the sun patio deck and infinity pool. there's also a private hot tub and master bedroom. the caribbean island has long been a favorite. now $90 million for a compound there in 2008. now the realtor listing the property won't say why martin is selling. steve tweeted out the news of the listing, but didn't give a reason. back to you guys.
>> you should see on twitter all of the references to the jerk. you've already mentioned wild and crazy. we think of him as a crazy comic but he is a fair amount of savvy. >> anyone who read his books and watched him, and he's a great tweeter, he's a very smart guy. this is a savvy investment. st. barth's in 2008 and 2009 suffered with the economic crisis. he bought at a very good price. now he's selling at a time when the international buyer, the luxury buyer is just pouring into st. barth's. so his timing was excellent. all right. we should mention the dow is flat lining. lululemon brought back the yoga pants after making changes in the material so the abouts are no longer sheer. what is the best tag line to sell pants once see-through and now are not?
through you thick and thin. zbr oh, come on. i see london. i see france. i can't see your underpants. shane says hindsight is 20/20 pants. previous b pants we're downward dogging it. i can't keep a straight face because having been in london, i know that the connotation of pants for english is a little bit different. i think trousers is the preferred term over there. we try to understand the difference. they're exactly where they were at the start of the show. and dollar general is the biggest loser. we had a takeover in technology in which sales forces are
willing to pay a premium. which is something we have seen in a number of technology deals. >> geologic is out with figures that in terms of the nourm of deals, not necessarily a dollar amount, but the lowest globally since 2005. you always talk about confident in making acquisitions, maybe right now they're seeing too many what ifs to pull the trigger. >> yeah, it continues to be the case. i'm not expecting an overly busy summer. continue to see these deals here and there. but at this point point nothing major and not a flood the way we really thought we would see. >> so many factors you could argue as to why there should be. >> no top line growth. incredibly cheap time to do it.
believe me, they can say those things over and over again. you have to get a ceo to sign on. with a very positive market, you may think, why should i sell unless i get a huge premium? >> have a great afternoon. if you're just joining us, here's what you missed earlier on. >> welcome to "squawk on the street." . here's what happened so far. >> even if we didn't have a single illegal immigrant, we still need immigration reform and to make sure the illegal immigration problem never happens again and we need to zeal with the people who are here legally. >> that's why you get incredible volatility. people are stepping back, waiting to see greater clarity on both sides. >> it was as if there was no buyer in the world the moment they said there's a prom. yesterday we didn't find out until after. the market kept going up, up,
up. what is going on? that's not the kind of market that we like. >> i'm worried about the bats, the bees. all problems for the the world, actually. i think it's a sign of armaggedon. but otherwise it's fine. if they continue to go up. what worries us is they will not deliberate over the next couple of quarters as much as the investors want them to or as quickly. they will continue to print in my opinion. i don't care they will have an exit strategy ever. >> good morning. we're live here at post 9 of the new york stock exchange.
let's gek a check on markets that have turned negative. we're keeping a close eye on this of course because it's a tuesday. well t dow is up 19 points right now. the s&p 500 is a couple of points lower. and here's some stocks on the s&p 500 that are hitting a 52-week high. target, microsoft and ford all doing well. and canadian pacific seeing reports on the company about 2.5% there. >> let's get to a road map this hour. cash is king. apple may have started a trend, returning some of it to shareholders. we'll see more of the companies joining the ranks. two-thirds of american who is lack health care may not get coverage under obama care. the chairman and the senate of the republican policy will get a
take on why coming up. >> and a social media club so exclusive that tiger woods and lindsay lohan did not make the cut. it's june. it's a tuesday. could the tuesday streak be over? let's bring in art cashin the director of floo operations. you've been focusing on japan here. yesterday was the first day that almost an interconnection between the after markets and japan and here. got a bit more muted. there was an influence. but it wasn't as heavy. i think what you've seen is there was a pickup on the yield on the ten-year. i haven't seen the japanese bonds occurring over there.
so these are key concerns. tomorrow he is due to drop a couple of shoes and people are waiting to see what that may in fact bring. so there's a slight anxiety. so i think we have an uphill road in trying to make the 21st day in a row. >> you call them the trap door on friday afternoon. the weird action. are these just computers deciding we want to suddenly buy or sell? >> no. interestingly enough it had a lot to do with market on closed orders. people said, well, was it all part of the rewaiting? it should be somewhat neutral. what i think people don't realize is when you have that kind of liquidity and people have a lot to do. they say, i'm going to wait for that period. there will be extra volume and i can get it done.
it looked like they were $3 billion. more to sell than to buy. that's a huge amount to come in on the close. that's why you saw that trap door plunge in the final 20 minutes. yesterday you had the reverse. not anywhere near as huge. but there was half a billion dollars to buy, and if you had new money for the new month and you couldn't committed it all, you had to look at the clock and say uh-oh, tomorrow is going to be terrific tuesday. so i think kind of a clock driven gave us a minor spike. >> so we may be brought forward tuesday to monday afternoon? >> that can happen, too. you may have seen some of that. there's a little caution.
this tuesday will be the most difficult to keep the streak going. >> we focused on the technical aspect of this. but you mention what's happening with ten-year u.s. yields. japanese debt yields as well. underlying all of these actions, what so you think is the changing story out there that has people a little bit worried? >> well, people are concerned -- particularly in japan, that, you know, that most of of their bonds have been domestically held by both their funds and nar people. and we're getting cross signals. one of the things that helped japan was a rumor they were going to push for the government pension fund to buy stocks. that's a great rumor. except they already own government bonds. so is it going to move there? they have a real job in front of them. they come out and announce, listen, we want to push inflation up to 2% or higher.
and you're sitting there looking at a japanese bond, a ten-year, that's yielding under 1%. >> right. so you're saying, wait a minute. you want me to lend you money and tell me that i'm guaranteed to lose on it? that's why you get yields creeping up in a simple fashion. and that has markets around the world worried. if that carry trade aspect starts to come apart, it involves almost every market on the face of the earth. >> talk about a high wire act. thank you so much. meanwhile, tesla is holding its annual meeting in mountain view, california. phil lebeau has all the details on that. >> good morning, carl. i think we're going to hear a comment or two regarding the news that you talked about. that tesla has lost the initial bid for now to have direct sales in the state of texas.
tesla also lost a battle for real estate. remember, the ceo elon musk said he would consider seeking national action in order to ensure direct sales. one of the issues likely to come up at the annual meeting is the model "s" sales are expected to begin in europe next month. and when you look at the united states year to date and ev rates between the model s and the leaf and the chevy volt. and in terms of how investors look at tesla versus nissan. tesla is up 2%. let's look at shares of nissan. it was added to the s&p 500 and
s&p 100. that's giving general motors a share as well. we are going to listen to what elon musk is going to say today. i bet he has a comment or two about the decision in texas, not to give them an exemption. >> he's never shy to share his thoughts. thank you for that. why the majority of americans may not have health insurance next year despite obama care. senator john barrasso will join us more with that. first, rick santelli is ready to talk about his favorite subject, rick? >> absolutely. we're going to talk about the fed, the taper, we're going to talk more regarding japan. yes, we're going to do battle. brian bath l coming up in ten minutes. >> are you thinking of playing golf with your spouse? why not show up in style with
his and her cnbc polo shirts signed by the entire "squawk on the street" gang? well, it can be yours if you can guess friday's nonjob farm number. don't forget the hash tag, nail the number. you have to be at least 18 years of age to enter. sorry, kid. for all the official rules and details, go to stocks.cnbc.com. good luck. the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
>> a new study finds two-thirds of uninsured americans don't know if they'll buy health insurance by the deadline set by the affordable care act. joining us to weigh in this morning is senator john barrasso of wyoming, serves as chairman of the republican policy committee and happens to be a physician as well. good to have you back. good morning. >> thanks, carl. thanks for having me. >> what do we make of this survey zm two-thirds of americans don't know if they'll buy coverage by the health line. that makes the problem less serious. >> there's so much chaos and confusion out there with this health care law. you're absolutely right that the whole goal behind it was to get a lot of young, healthy individuals, those that consider themselves young and invincible to buy insurance and not just to buy any insurance, but to buy
more expensive, covering more things than they may need or want and that's the only way they can help keep cost down for older, sicker americans, and others say, hey, this isn't for me. they don't know if they're going to qualify for tax breaks. they don't know what kind of subsidies they're going to get. and for the most part the penalty is not that great. i'm not going to sign up to the point that the congressional budget office says they are expecting 30 million americans are uninsured no matter what happens to this. >> it's amazing. all in some form or fashion. maybe i'll pay the penalty. what is the solution to that dilemma, short of throwing the whole law out? that's a steeper political hill to climb. >> that's what i think the right solution is, carl, to repeal the entire health care law and get
something that works to lower the cost of the care. if we can lowest the cost of care, that's what we need to do. in the same survey so many people said they believe the cost is going to go up. that the quality availability of tests and procedures is going to actually be harder after january 1st for them to get the care they need once the obama health care law gets fully implemented. >> but senator, with this deadline now looming, barring any major change in terms of throwing the bill out all together, if the problem here, you can understand why it's such a dilemma, right? you have a law coming into place. you don't want to penalize people who can't afford it. what are the choices? do you raise the penalty so they are much stiffer? if i want to avoid this, i better figure out right now how to sign up.
>> well, the problem with that, kelly, is senator max baucus, one of the original says he sees a giant train wreck coming. young people are not inclined to sign up. that's the problem with all of this. they have to buy insurance more expensive than they normally have to pay, covering a lot of things they don't want covered. they understand there's no reason for a single young male to buy insurance that covers mediate rik eye exams when he doesn't have children. those are issues they say they don't want to buy those sorts of things. they say we need to repeal the whole thing, start over. go step by step. there are things to do to lower the cost of care.
>> it's not the only story dominating the hill. leaders of conservative groups saying they were mistreated by irs agents. what is your expectation for the next couple of days on this one? >> we want to continue working together and aggressively look for the answers. how far up does this go? what is the connection between the since gnat office and washington? and you see the scandal unfolding in many ways? what is happening with the specific targeting of the groups. so many of these conferences staying in presidential suites, traveling the videos that you have seen. tough economic times in the country continued to waste taxpayer money to win. and hard working american taxpayer ls.
we've seen a lot of that video. certainly hotel industry taking note, too. thank you, carl. thanks, kelly. we should offer a free iphone or ipad to everyone for signing up for the health care law. bribing consumers may be the only answer. >> apple has been a leader when it comes to innovation, but did they spark another trend in the industry? >> and keep tweeting. lulu lemen bringing back the black yoga pants after making sure the material is no longer see-through. what is the best tag line to sell these new pants? tweet us at squawk street and we'll get your answers later on. oh, he's a fighter alright.
since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪ [ male announcer ] see what's happening behind the scenes at ducktherapy.com. made a retirement plan, they considered all her assets, even those held elsewhere, giving her the confidence to pursue all her goals. when you want a financial advisor who sees the whole picture, turn to us.
wells fargo advisors. chalky... not chalky. temporary... 24 hour. lots of tablets... one pill. you decide. prevent acid with prevacid 24hr. ♪ even if it's so wrong ♪ i wanna scream out loud ♪ boy, but i just bite my tongue ♪ ♪ this one's for the girls messin' with boys ♪ ♪ like he's the melody and she's background noise ♪ [ volume decreases ] thanks, mom! have fun! you too. ♪ ♪
welcome back to "squawk on the street." i'm josh lipton. we are watching dollar general, the discount retailer, and it is ugly. same store sales improved. but margins were down. and retail consultant and cnbc contributor says the print reflects how weak the low end is with both dollar general and wal-mart disappointing. kelly, back to you. >> that's right. we're certainly seeing a trend there. now cash rich apple is helping to refinance a $100 billion payout to shareholders. is it time for others to follow suit and get serious about returning cash as well? and mike santoli. senior columnist with yahoo finance. good morning, guys. >> how you doing? >> let's start with you. you are saying a new era of cash
returns as they follow apple's lead. how big are we talk sng. >> we are talking big. we have seen apple do this on april 23rd. to name a few, and we think there's more to come. tech companies have 10% of their cash. that's way too much. most companies have negative net cash balance. and that's the way to go. >> mr. santoli, what other names do you expect to follow suit? >> i think some of the stocks have really started to act very well are kind of interesting. you have obviously seen that we forgot for so long really revived. that's the kind of thing we're looking at where you have a mature business. you're no longer in the hyper growth phase. you have an inefficient balance sheet. they should take on more debt
than they're carrying right now. and not only did apple lead the way in its decision but the whole example of having a shareholder go activist and shake loose their cash, you know, that obviously got out there, and other management teams maybe don't want to see that happen. >> why have these companies been reluctant to return cash to shareholders if that's ultimately what they can do here so easily and with aid of borrowing at such low rates? >> is this for me? >> mike santoli, go ahead. >> there's always been a sense that this is a signal you are no longer going to grow. not really looking for financial engineering to do things for shareholders. ibm has been in this camp for a long time. it's a cultural thing that is
sort of changing. >> what do you make of this argument? it short of shows this for the romance. they still have to buy you roses here and there. does it say something negative about the long-term growth model? >> well, it says something about that. but also technology companies need to grow up. we're a lock way the from the 90s. and at one point all the industrial companies and consumer companies were the tech companies way back. and they had to grow up and diversify. and they all went through bear market where is they realized they needed to pony up cash to generate returns. and now tech companies are going through that. and the real key here will be who can generate the cash sustain bli and deliver cash to shareholders sustain bli with the onset of the cloud and other technological changes and not every company will be able to do it. but the ones that can, like a cisco, like an ibm and now an
apple can really stand out by delivering this cash and showing they can deliver in the process. >> you mentioned already because of this in new phenomenon, a lot of the names have started appearing on selection screens tochlt what degree is the secret out? >> i think the obviously ones have moved. intel and microsoft have had huge runs. maybe those there where it's considered to be the no brainer trade. but i think a different tier of tech companies may be below the old giants. there is potential there. as ben suggests, it should be on an ongoing basis, kin of setting up your business to maximize cash flow and share it. not necessarily these one time unlockings of a big cash from the vault type of move. >> ben, in a word, where do you expect shares to go from here if they do unlock this potential? we feel pretty good about the
second half and now before for tech. you are starting to see the understand performance for tech as a narrow. and many in the second quarter after massive underperformance in the first and there's more to come. >> part of the rotation perhaps. thank you both. >> thank you. >> the bell is about to sound across europe as the dow sits up half a point. we'll get the close and the impact on the afternoon session in just under three minutes.
markets closing across europe. a mere image of what we saw yesterday bouncing back after declines we saw across the region with economic data adding to the sentiment. spanish job claims dropped in may. a pmi report showed the construction sector grew for the first time in six months. here is how we close. rallying with the german and french markets and here's a look at the european banks among the big winners. upgraded to bye from neutral. >> do you? >> i do a little bit. i'm just proud that i know it.
>> that taught a lesson. let's get to rick santelli in chicago looking at the markets. >> we were in a battle but we ended up on the same side. i'm the go-to guy when people want to say the fed's programs are good. i always take the other side because i believe it. the only argument that i see that they, the other side, people like this current policy said -- you said there would be inflation you're wrong, wrong, wrong. i go back to the tapes and i've been very careful. it's not inflation issue. i would call it a commodity issue. the cues, the twists currently, have they not created a bit of
commodity inflation? >> it depends on the definition of inflation. what thing has gone up a lot in skral recently? the stock market. maybe that's where inflation is you can argue there there is too many markets and too few goods. >> the other thing i've been careful to say is inflation, it's baked in the cake. nobody will get a taste of it until things are good. this is the biggest problem with any exit. interest rates will go up with if there are no fed programs. add in that all these m.i.t. models were accurate. they weren't accurate about human behavior. right. so we have a massive stock of money in the economy, but there's no "v". there's no velocity. so where did the money go? financial assets?
>> right. financial assets and parked in the giant banks. they make money every day. they have a giant carry trade on. so if the intent is to stimulate the economy, they missed. you can't flood money boo the system, increase employment. and therefore the economy gets better. that's a long way from monetary policy. >> now. right when all of this was going on in the fall of '08 he was very vocal -- >> boy, try to say that ten times. he said the fed was oerptding at the end of legality. he said you have to be careful of your reputation. credibility is a hard thing to get. if you think you can cause a little bit of inflation and then turn the wheels down, good luck with that. with full face value, because he's the last fed chairman that
had to do the hard job and raise rates. >> it was a good battle. i want you to come back. this is going to give us many more chapter battles regarding money and inflation at some point down the road. back to you. >> thanks, guys. we'll see you soon. bob pisani is here at post 9. >> sort of a mixed picture here. 4-3 in advancing stocks. commodities are on the mixed side. i want to show you what is up so far the most. health care and financials are up better than 20% on the year. consumer discretionary and staples. an unusual mix for what has been advancing. they're on the up side. by and large, a mixed picture. and we got a lot of calls and
questions about what was going on in high yield etfs. it's been a rough patch here. this is a big one. down about 4%. this is the biggest decline we have seen all last year. 4% is a lot in a high yield fund. you're only yielding 5%. so wrour giving up your gains for the year. the interest rate sectors are not rebounding on a day when the market is up. that's been the big monster in this space for a long time. if you want to own real estate, this is what you're going to own. it's not rebounding on a day when the overall stock market is looking more on the the upside, at least. that's a 12% decline. that's the worst we've had going back almost a year. how about outflows from bond
etfs? it's continuing today even though you're getting inflows into those high end ones. this is the big kahuna in this space. this is a mix of different bonds. down again today. no real sign of stabilization there so this continues for another month or so. the bond funds are down notably. that could trigger a lot of discussions. let me show you dollar general and all the other ones in the space. tough day for dollar general. the big problem they have, and just because you service the low-end consumer doesn't mean you have a stable base of buyers. let me show you what their guidance was like. i think got a lot of stuff wrong. top line growth, lower. earnings growth expected lower here. here's the problem, inventories were up 21%. sales growth was only up 9%. that's a big issue. so the lower end consumer is
moving on and buying lower margin items. they're not buying the higher margin items. the other issue, of course, and this is always a problem with the stores is wal-mart is considerably expanding the small store concept. not only do you have your consumer, your customer buying lower margin items you have wal-mart nipping on your heels. so they are caught by surprise and having are have to lower their numbers right now. >> big sur prize. the sector is doing so well. are they now making ind roads? >> they definitely are. you have consumers buying lower margin items in their store. a double whammy there. >> yeah, food for thought ahead as well. and the investor conference is today in new york. mary thompson is there live talking to the movers and shakers in the banking industry. what do they tell you?
>> earlier today he was speaking about the unprecedented easing by the european central banks and the market's positive response. he's also highlighting two issues he thinks are critical to the financial industry in the months ahead. first of all, he says how the markets will respond to the anticipated and vetch wall withdrawal of the quantitative easing and while the amount of new regulation is unprecedented, global regulators are now parting ways. >> in the u.s. we're seeing a lot of talk about regulation but indeed a dialing back in terms of intimidation of the key measures. in asia ya, it's a very clear sign that regulators would rather go their own ways and really focus on growth. in europe it's very clear that the pace and overall extent of regulation in that debate is going to win. >> now the ceo sat down with mr. jane afterwards.
he said his main concern is europe specifically. will that area have stabilization without social unrest. here on the u.s. he remains bullish, even though he's concerned about longevity in the u.s. he says the energy situation in the u.s. favors the country over europe. he also says if congress does pass an immigration bill, he believes it's going to be a game changer. last we spoke tw the brokerage business who said with the fed set to pull back on quantitative easing, hedge funts will continue to move money out of bonds and into stocks. >> i think in 2008 everyone took out their college textbook and it said less volatility, add bonds. now having benefitted from that a lot, it may be time for rotation. we're seeing that in investor preference. >> we're going to have more from the conference throughout the day, specifically on the closing
bell. you will want to tune in. we'll have a bunch of interviews. guys, back to you. >> wow. that will be great stuff. we look forward to that. echoing the themes bob was hitting on as well. down on the floor the dow is shooting for 21 straight days of tuesday gains. but having a tougher time of it today. we're down ten points at the moment. the question is what is the fed doing in response? and tiger woods is invited to augusta to the met gala but he was rejected from this exclusive club. the ceo of the super selective social network a small world will join us live when we come right back. with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator...
find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. coming up next on the half, bond king jeffrey gundlach on rates and a whole lot more. what would the traders buy today? plus is the force with sales force? two traders, two opinions. one big debate. >> great, looking forward to that un. for now the federal reserve and the stock market seem to be playing a game of chicken. steve liesman joins us with wow how the fed looks at the market
and how the fed looks at the market in response. yesterday we had mark clip who said you better believe the fed is targeting the market here. >> yeah, it's a big deal and in the time i've been reporting on the fed there's been a dramatic change. what happened is because of the policy becoming weaker the fed found itself with few areas to affect the economy. it certainly seemed as a major policy tool that affects consumer wealth, corporate finance and economic growth. there's a potential growth of instability, a big selloff, and inflexibility. it limits what the fed can do. how will the market take any tapering out there? and then let's look at the the market's view of the fed. there's a fear of policy
mistake. maybe less so on the inflation size. but perhaps fear that the fed would be too tight, too soon. unclear if the market sees less stimulus. i'm thinking the federal reserve absolutely hates it. and the market quite a bit about uncertainly regarding the triggers for changing. >> what is so interesting is the debate and the rhetoric that you're hearing. and bill gross in particular comes to mind on this. people are saying not so much that the old model is dead. that they are fighting because they are going to screw it up. just are they constrained by what more they can do? does the fed itself think they are doing more harm than good? this is why we're hearing
hawkish commentary from parts of the fed that we don't consider hawkish. >> there's a lot of uncertainty. they have arrived at a place reluctantly that they're doing what they're doing in part because of what the fiscal side is doing the argument that the fed is doing more harm than good has been out there for a while. i'm not sure it's really new. and the way it's mostly countered is what is the alternative? will higher interest rates help the economy? >> we know the chairman is not going to jackson hole. whispers today suggesting they would like to see bernanke stay for another term. do you believe that? >> first of all i don't think bernanke wants to stay for another term. his disagreements with greenspan and how he became a cult figure
in the fed. i think bernanke thinks the institution of the fed is more important than the person. maybe you can say. what is it like when you're on the other end of the phone and the president says we would like you to say on? i think that's a powerful phone call. i don't know how a person reacts in response to that. >> i don't think anyone knows until you get the call. >> i usually handle it pretty cool. we often start with a jock. >> blaming your wife or husband is the easy one. i have to talk to my wife. i believe the market believes it's more likely than not that bernanke would move on. >> i think a lot of people putting the odds at 20% that he will stay. steve liesman, thanks a lot. by the way, don't miss the interview with bill gross on closing bell at 4:00 eastern time. >> you do a scarily good gross
impression. >> we love bill. when we come back, a real members only club coming up. >> i don't make the rules. >> please. >> no. >> hey, what's up, shorty? what's up, pretty girls? >> you can not beg your way into this club. find out who is making the cut. >> and it's lady's night on fast money tonight. and they're all women. you can be sure to tune in to that tonight at 5:00 eastern. don't miss it. ♪ je t'adore ♪ c'est aujourd'hui ♪ ♪ et toujours ♪ me amour ♪ how about me? [ male announcer ] here's to a life less routine. ♪ and it's un, deux, trois, quatre ♪
♪ give me some more of that [ male announcer ] the more connected, athletic, seductive lexus rx. ♪ je t'adore, je t'adore, je t'adore ♪ ♪ ♪ s'il vous plait [ male announcer ] this is the pursuit of perfection. ♪ s'il vous plait (announcer) at scottrade, our cexactly how they want.t with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine.
you may have heard one of the first social networks when it launched in 2004, around the same time as facebook. unlike facebook, a small world is for the elite and recently became more exclusive when it parred down its membership and relaunch as a paid subscription service. the ceo joins us this morning on an unbelievably beautiful day on wall street. >> beautiful. >> most social networks are going for scale and growth. why make it even more restrictive? >> we're really focusing on
quality over quantity. and focusing on member experience. i would say that we're much more of a travel and lifestyle community or club. so to speak with benefits and privileges and where people share extraordinary experiences. we have a social networking component but we are more than a social network in many ways. >> it wasn't the original premise to keep memberships so narrow. because i can tell you as someone -- i had to look this up. i had a membership and someone sent me the invite and i tried to log in and got to what i think amounts to a sorry. >> pretty much. why go to that approach now? >> we're actually throughout our entire existing membership when we went to subscription model and inviting members back in waves. right now we're in the beta phase so we invited our nearest and dearest and investors and most active and fun members. i'm sure you'll be receiving an invitation in due time. >> no, no, no.
what is the business model at this point? how does it work and what's your profitability like? >> we are a subscription based model -- >> which is not by any means a large subscription fee. >> it's a very affordable subscription fee, 105 u.s. dollars on an annual basis. on top of that we ask members to make a mandatory donation towards the foundation which is another $5. everything is focused on creating member values and they are entitled to special rates and upgrades and free spa treatments and free week in the caribbean, all of this kind of amazing stuff. and this is sort of the price point we felt we could do it at. >> how are you determining who to invite or not invite, net worth or a subjective thing? clearly tiger and lindsay were not good enough. >> we're not really focused on
net worth. we're focused on people who are internationally minded. i would say the ideal small world member is someone who is a citizen of the world. and tends to speak a couple of languages, grown up in a few different places. we're a needs platform in the travel and lifestyle space. we're most used for people who are on the move and who are really internationally minded. >> how global are you? >> we have members in every country in the world. >> wow. >> it's interesting. i'm sure there's exclusive advertisers who aren't looking for a broad audience that will go to you to advertise? >> absolutely. we've had incredible advertisers in the past and it will be a secondary revenue stream for us, but not a huge focus. we're going to select advertisers who give members a benefit as well. >> thanks for coming in. >> thanks so much for having me. >> small world. keep an eye on it. >> a quick update on one of the squawk break through companies,
bonobos gave us a look. here's what the ceo had to say about the store. >> there's two ways to do it. you can just walk in or make an appointment on the website and set up a one or one fitting. you spend a half hour visiting with a guide and figure out what you like. at the end, on an ipad, we place an transaction for you, generally arrives within 48 hours, often the next day depending on where you live. you get the clothes at your office or home. >> bonobos plans on opening two more stores in texas and maryland. it's interesting the e commerce companies have decided we need the face to face. >> doing bricks and mortar. lululemon has come up with a formula to fix the see through pants. what kind of marketing strategy they should use to let people know about this. we'll read the best ones next at squawk street. [ lorenzo ] i'm lorenzo.
i work for 47 different companies. well, technically i work for one. that company, the united states postal service® works for thousands of home businesses. because at usps.com® you can pay, print and have your packages picked up for free. i can even drop off free boxes. i wear a lot of hats. well, technically i wear one. the u.s. postal service®, no business too small. that's not much, you think. except it's 2% every year. go to e-trade and find out how much our advice and guidance costs. spoiler alert: it's low. it's guidance on your terms, not ours. e-trade. less for us. more for you. [ agent smith ] i've found software that intrigues me. it appears it's an agent of good.
that's a nice crowd joining us on the plaza today. >> it is. >> squawk on the street, lululemon brought back the yoga pants after making changes so the pants are no longer sheer. stocks up about 3%. what's the best tag line to sell pants that were once see through and now not? >> yoga pants, safe against x-ray vision. >> fan tweets, sheer relief. >> john writes you'll have to use your imagination now. >> new slogan, buy them new without the view. bob tweets in, our new pants, you can't see the difference. >> what a story that was. >> keep an eye on gm, it's going into the s&p 500 replacing. dollar general continues to be pretty shall the biggest lag ard
on the 500. they cut the full forecast, gross margins were down and inventory was up. >> maybe a small weather effect but it's taking down the whole sector. >> we're going to get lunch. >> then going to lululemon. >> let's go to the halftime. >> welcome to the halftime show, four hours to go until the close. let's look at where we stand on the treat. it is green across the board. there's the dow nearly up 8. nasdaq higher as well. the bond king unploged. on the markets and rates and japan and much more. it's a halftime exclusive interview. is the force with, you sales force makes the biggest deal ever. what does it mean for t